Determine the outcome of a futures hedge

Assignment Help Accounting Basics
Reference no: EM133014466

Question - On 25 July of a particular year, an American firm decided to close its account at an Australian bank on 28 August. The firm is expected to have 4 million Australian dollars in the account at the time of the withdrawal. It would then covert the funds to U.S. dollars and transfer them to a New York bank. The September Australian dollar futures contract was priced at $0.7571. Determine the outcome of a futures hedge if on 28th August the spot rate was $0.7237 and the futures rate was $0.7250. All prices are in U.S. dollars per Australian dollar. The Australian dollar futures contract covers 100,000 Australian dollars.

Reference no: EM133014466

Questions Cloud

What the amount of stock that should be measured : On 1/5/2017 the company issues $750000 of 3% loan stock at $800000 with issue cost $100675. What the amount of stock that should be measured
What is the value of the stock : A preferred stock from ABC pays $3.55 in annual dividends. If the required return on the preferred stock is 6.7 percent, what is the value of the stock
What would the loan balance be in five years : If you get a 15-year mortgage with an interest rate of 7 percent, what are the monthly payments? What would the loan balance be in five years
Determine the number of units : Use this information to determine the number of units that were transferred from the Work in Process. Round answer to closest dollar
Determine the outcome of a futures hedge : The September Australian dollar futures contract was priced at $0.7571. Determine the outcome of a futures hedge
How much was total non-current assets : Total non-current asset was P195,000. Working capital during the year was P50,000. How much was total non-current assets
Determine which option is better for alloils limited : The company uses the straight line method for depreciation. Assume a tax rate of 30%. Determine which option is better for AllOils Limited
Calculate the production overheads to be absorbed per unit : Calculate the production overheads to be absorbed per unit of each product based on an ABC approach using suitable cost drivers
What is the total of fixed costs : A break-even chart shows maximum unit sales at 5,000 at £100 each, maximum profit of £1000,000, What is the total of fixed costs

Reviews

Write a Review

Accounting Basics Questions & Answers

  What would be the journal entry for finished goods

what would be the journal entry for "finished goods with a carrying cost of 138500 are sold on account for 199500. assume a perpetual inventory system and enter a compound journal entry".

  Overview of general ledger relationships

Overview of general ledger relationships. Estevez Company uses normal costing in its job-costing system. The company produces kitchen cabinets.

  What pretax amount related to the lease would IC report

IC purchased the equipment from Builders, Inc. at a cost of $3.1 million. What pretax amount related to the lease would IC report

  Prepare the journal entry for sage to record the sale

Prepare the journal entry for Sage to record the sale, assuming that the recourse liability has a fair value of $6,970. (If no entry is required)

  Determine the basic EPS amount

The basic earnings per share for the period ended 30 June 2018 was $1.50 per share. Determine the basic EPS amount

  Emilio alvarez and gracila zavala joined together to form a

1.what are the main advantages of a proprietorships b partnerships and c limited liability companies?2.what are the

  Discuss the accounting and ethical implications

Royal Docks, Discuss the accounting and ethical implications of the above situations from the perspective of the reporting accountant

  Which accounting principle requires reporting expenses

Which accounting principle requires reporting expenses in the same period as the sales they helped to produce? Going concern./ Matching

  What were the total sales on account in April

What were the total sales on account in April, April 1 Sold merchandise for $4,500 to Alto Music Center; issued Invoice 3912 with terms of 1/10, n/30

  Prepare the journal entry to record bonds on July

Prepare the journal entry to record Tanner-UNF's investment in the bonds on July 1, 2021 and interest on December 31, 2021, at the effective (market) rate

  Calculate at what price the bonds are issued

On December 31, 2018, University Theatres issued $500,000 face value of bonds. Assuming the market rate of interest is 6%, calculate at what price bonds issued

  Discuss the concept of liquidity

Discuss the concept of liquidity. Why is it an important measure for a business to monitor? Provide an example of a financial ratio

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd